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Contribution to Economy: Manufacturing Drone & its components in India

Contribution to Economy: Manufacturing Drone & its components in India

The drone services sector is much larger in scope and includes operations, logistics, data processing, traffic management, etc. It is projected to rise to almost INR 30,000 crore over the next three years. Over five lakh jobs are projected to be created in the drone services sector in three years. Combined annual sales turnover of PLI beneficiaries in the drone industry reached INR 3.19 billion in 2021-22 from INR 880 million in the previous year.

According to a report from the World Economic Forum, (WEF) Drones can increase India’s GDP by 1-1.5% and create about half a million jobs. India can achieve a 15% increase in productivity in its agriculture industry by incorporating drones.

In addition to having a favourable effect on the GDP, digital technology-based agriculture, according to a report from the Ministry of Electronics and Information Technology (MeitY), can unleash an additional value of US$ 65 billion by 2025. And the GDP impact of digital agriculture will be even larger.

Additionally, by integrating precision agriculture technologies like drones and farm consulting services, together with increased agricultural output, a US$25 billion economic opportunity can be realised. According to media reports, this can be accomplished using a variety of new and existing data sources, including soil health cards, meteorological information, and farm/tractor-based sensors across several channels. Similarly, there is an opportunity for about $15 billion in agricultural credit and insurance to be generated through digital interventions.

In addition, $50 billion in investment is anticipated in the drone component sector over the next few years.

Trade (imports and exports)

From April 1, 2022, the ownership of any drone without a valid Unique Identification Number (UIN) will be declared illegal and subject to penal action under the law. Foreign participation is allowed; they can invest or own companies operating drones in India. It is important for foreign investors to be aware that multiple enterprises within a group of companies might submit distinct PIL applications when evaluating potential in the local drone industrial ecosystem.

In an effort to strengthen domestic capabilities, India has prohibited the import of drones, with the exception of those used for research and development, defence, and security. On February 9, 2022, the Indian Trade Classification (Harmonized System) received a notification from the Directorate General of Foreign Trade of the Ministry of Commerce and Industry prohibiting the import of drones. This action aims to promote “Made in India” Drones, a statement from the Ministry of Civil Aviation said.

The Indian government is now aggressively eyeing the drone industry in a big way. After giving a fresh lease of life to the drone industry with the new, liberalised regulations with the Drone Rules 2021 and approving PLI scheme for drones and drone components, the government is also helping Indian Drone manufacturers with made-in-India Exports.

Nagendran Kandasamy, Founder & CEO, Throttle Aerospace Systems Pvt Ltd has stated that, “The new drone import policy witnesses the government’s focus on making India a global drone hub by 2030.

Employment (Eligibility)

The government has maintained the minimum sales thresholds for Indian MSMEs and start-ups at INR 20 million (for drones) and INR 5 million, respectively (for drone components). The number of recipients is widened and made more flexible as a result. An eligibility norm for non-MSMEs, in terms of annual sales turnover, is INR 40 million (for drones) and INR 10 million (for drone components).

There are countless industries in which drones can be used. These include, among others, geo-spatial mapping, photography, agriculture, mining, telecom, insurance, oil & gas, construction, transit, disaster management, and law and order. Since drones offer a number of benefits (including adaptability, great reach, and ease of use, particularly in India’s rural and isolated areas), it is anticipated that they will significantly increase employment prospects and stimulate economic growth.

The government and numerous businesses are becoming aware of the social and economic opportunities provided by the drone manufacturing sector. As a result, the drone sector in India has the potential to grow tremendously from its current size. To grasp the objective of making India an international drone hub by 2030 and opening up drone business opportunities in India, the industry would need trained people.

Market Demand and Supply

Drones offer the technological leverage may be used to gather data and deliver it to farmers, who can then use it to create more profitable farming approaches. According to the survey, India has roughly 6 lakh populated villages with moderate levels of agricultural activity. Drone technology enables farmers to automate a key component of their operations and increase yields per hectare.

Drones should be regarded as a fundamental piece of agricultural machinery, experts suggested, alongside tractors, cultivators, ploughs, diggers, and combine harvesters. They added that a strong local support structure must be created for drones through initiatives like the “Made in India” supply chain, targeted skill development programs, next-generation digital financing systems, and effective awareness-raising campaigns among farmer organizations and lawmakers. According to media reports, experts also stated that establishing a “green microcosm” in which a stable, integrated “rural drone hub” is established and maintained throughout crop cycles can significantly increase the use of drones in India’s agriculture industry.

The PLI scheme covers a wide variety of drone components:

  • Airframe, propulsion systems(engine and electric), power systems, batteries and associated components, launch and recovery systems;
  • Inertial Measurement Unit, Inertial Navigation System, flight control module, ground control station and associated components;
  • Communications systems (radio frequency, transponders, satellite-based etc.)
  • Cameras, sensors, spraying systems and related payload etc.;
  • ‘Detect and Avoid’ system, emergency recovery system, trackers etc. and other components critical for safety and security.

Drones can not just improve agricultural productivity but also other spaces such as defence, real estate, and weather forecasting, among other things. Backed by digital adoption, analytics, digital financing and well-coordinated efforts from local stakeholders, India can develop a framework to deploy an efficient drone ecosystem. 

By FY26, the Indian UAV market would be worth $1.81 billion (Rs 13,575 crore), according to research firm Research and Markets. A more optimistic estimate from the Drone Federation of India is Rs 50,000 crore over the following five years. “Strategic defence procurements are not included in this projection, despite the fact that agriculture, real estate, homeland security, and defence will be the few sectors that will be the largest drivers for the business. However, the market will grow ten times faster if the potential of drone deliveries and drone taxis is immediately realized, according to Smit Shah, Director of Partnerships at the Drone Federation of India.

Industry sources claim that up until last year, approximately 70% of the Indian market was devoted to homeland security. The DGCA, India’s civil aviation regulator, granted exceptions before allowing the remainder for civil use. Outside of the defence sector, drones are mostly used in agriculture for crop dusting and monitoring crop health, and in the energy sector to oversee hazardous operations or to monitor oil pipelines.

The country is certain to see a significant uptake of for drones and making India a worldwide hub for drones. Many stakeholders have praised India’s strategy for promoting unmanned aviation as well.

Ananya Khar

Ananya Khar is a Research Intern at Tatvita. Presently she is pursuing his bachelors in the Liberal Arts department at the Savitribai Phule Pune University.    

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